With global public cloud services revenue expected to have reached $260 billion at the end of last year, there is no arguing the fact that cloud hosted solutions will be a key driver for growth in the future.
Patrick Ashton, managing executive at the SilverBridge Group, believes that insurers can leverage the cloud for better agility and scalability in deploying new offerings.
“The cloud has become one of the most disruptive forces in business today. Irrespective of industry sector, company size, or physical location, the cloud has resulted in organisations rethinking how they not only manage their IT infrastructure but also develop solutions using the vast amount of flexible processing power, new data sources, and toolsets now at their disposal.”
In fact, the shift towards the cloud goes together with how many new data sources have become available. These can assist insurers with real world challenges such as fraud prevention, risk of NTU, poor claims experience, and customisable product offerings. Part of this shift can be attributed to the growth in the number of new data channels open to businesses where data has become a commodity. However, if used correctly, it can assist insurers gain deep insights into their existing and prospective customer base. It is especially in unstructured data (thanks to social networking) that organisations are seeing significant traction when it comes to the potential for insight and solution customisation.
“Traditionally, insurers have been seen to be slow-moving and unwilling to change. Thanks to the emergence of more agile fin- and insurtechs, this is changing. To be competitive in the digital market, an insurer must be able to understand individual customer needs more fully instead of approaching these needs from a mass segmented approach. People today expect tailored offerings serving their unique needs. New entrants to the market who are cloud and mobile first are able to deliver this as they can exploit data analysis to their advantage much more efficiently.”
Of course, this does not mean all is lost for insurers operating in traditional business models. They should view this as an opportunity to adapt and embrace the agility and scalability provided by cloud-based solutions. However, there must be a willingness to change. This starts with understanding the environment in which new entrants are becoming serious competitors through simpler, cheaper, and more customisable solutions.
“The cloud presents an ideal way to move towards that elusive single view of the customer. But the cloud is just one part of the challenge. An insurer should think how best to integrate the hosted value proposition with existing systems and processes. It is not possible to do a rip-and-replace. Instead, incremental changes should occur where insurance components are gradually migrated to a cloud environment and offerings enhanced through both new data sources and fresh customer insights.”
The cloud is not a silver bullet to future-proof traditional insurers against disruptive business and market changes. Instead, it should be viewed as a mechanism to fundamentally shift their business to make more use of available data and utilise that data to create a more efficient insurance business that provides bespoke solutions for an increasingly fickle customer base.
“Insurers need to deal with customers who expect traditional product and service offerings as well as millennials who demand more customisation to their specific needs. On top of this, there is the challenge of developing solutions that cater for the massive unbanked population in South Africa and the rest of the continent. This is not something that will happen overnight but will gradually permeate through all insurers in the country. Cloud and mobile will become one of the mandatory features of any such solution.”